JAMES O. BROWNING, District Judge.
Presbyterian Healthcare is a private, non-profit healthcare system based in Albuquerque, New Mexico. See Complaint for Declaratory Relief and Injunctive Relief ¶ 4, at 2, filed February 25, 2014 (Doc. 1) ("Complaint"). The New Mexico Hospital Equipment Loan Council ("NMHELC") is a state-created, see N.M. Stat. Ann. § 58-23-5 NMSA, but independently-run instrumentality, Complaint ¶ 5, at 2, that assists New Mexico hospitals in issuing bonds, see Transcript of Defendant Goldman, Sachs & Co.'s Motion to Transfer at 38:17-19 (taken Mar. 5, 2015) ("Tr.") (Edwards). Goldman Sachs is a multinational investment banking firm based in New York City, New York. See About Goldman Sachs, Goldman Sachs, http://www.goldmansachs.com/who-we-are/at-a-glance/index.html (last visited July 7, 2015).
From 2004 to 2009, Goldman Sachs provided financial services to Presbyterian Healthcare. See Complaint ¶ 11, at 4. In 2004, Goldman Sachs helped Presbyterian Healthcare issue roughly $147.5 million in Auction Rate Security ("ARS") bonds. Memorandum of Law in Support of Goldman, Sachs & Co.'s Motion to Transfer Pursuant to 28 U.S.C. § 1404(a) at 2, filed September 30, 2014 (Doc 28)("Motion Memo."). ARS bonds are
Goldman, Sachs & Co. v. City of Reno, 747 F.3d 733, 736 (9th Cir.2014). Ideally, ARS bonds allow the issuer to offer long-term debt while paying interest rates comparable to short-term debt. See Complaint ¶ 12, at 4. The ARS market is vulnerable, however, to auction failure: when there are more ARS bonds than bidders, the issuer is penalized by having to pay a set maximum interest rate. See Motion Memo. at 3.
In 2006, Presbyterian Healthcare wished to capitalize on a favorable shift in longterm municipal debt interest rates, and Goldman Sachs arranged to "synthetically fix" the ARS bond rate by having Presbyterian Healthcare enter into interest rate swaps with a Goldman Sachs affiliate. Complaint ¶ 13, at 4-5. Under these swaps, Presbyterian Healthcare paid the affiliate a fixed rate in exchange for variable rate payments based on the monthly London Interbank Offer Rate ("LIBOR"). Complaint ¶ 13, at 5. The parties expected the LIBOR rate to mirror the rates Presbyterian
Presbyterian Healthcare and Goldman Sachs began discussing investment banking services in late 2003, see Plaintiffs' Opposition to Defendant's Motion to Transfer Pursuant to 28 U.S.C. § 1404(a) at 15, filed November 24, 2014 (Doc. 35)("Response"), culminating in the issuance of ARS bonds in mid-2004, Response at 3. The parties now contest the legal implications of several documents and agreements created during that time.
In late 2003, Goldman Sachs sent Presbyterian Healthcare a proposal pitching its banking and underwriting services. See Proposal to Provide Investment Banking Services, filed November 24, 2014 (Doc. 35-2)("Proposal"); Edwards Decl. ¶ 3, at 1. The Proposal touts Goldman Sachs' experience working with health care providers, see Proposal at 3, asserting that it "is a leader and innovator in ... capital formation, underwriting[,] remarketing[,] auction agent/broker-dealer services[,] derivative product development and execution[,] strategic advisory services[,] and use of credit enhancement," Proposal at 4. Goldman Sachs also underscores its long-term commitment to clients:
Proposal at 3.
On May 7, 2004, Goldman Sachs entered into an agreement with the NMHELC to purchase Presbyterian Healthcare's ARS Bonds and serve as the underwriter. See Purchase Contract at 1,
On May 12, 2004, Presbyterian Healthcare, Goldman Sachs, and Wells Fargo Bank entered into the Broker-Dealer Agreement, which setting terms for issuing four categories of ARS bonds.
Broker-Dealer Agreement at 14 (emphasis added). A page later comes a forum-selection clause, titled "Governing Law; Jurisdiction; Waiver of Trial by Jury":
Broker-Dealer Agreement at 14 (emphasis added).
FINRA members must ostensibly adhere to its Code of Arbitration Procedure for Customer Disputes ("FINRA Code"), Rule 12200 of which provides:
Parties must arbitrate the dispute under the Code if:
FINRA Code Arb. Proc. 12200.
On February 10, 2014, Presbyterian Healthcare filed a claim against Goldman Sachs with the Financial Industry Regulatory Authority ("FINRA")
The claim asserted eight counts: (i) violations of FINRA and Municipal Securities Rulemaking Board
FINRA Claim at 29.
About a month after Presbyterian Healthcare filed the FINRA Claim, the parties agreed to stay the arbitration proceedings so that Goldman Sachs could "challenge the arbitrability of this matter and to file a preliminary injunction motion before a federal district court." Letter from Goldman Sachs to FINRA, at 2, filed September 30, 2014 (Doc. 26-6).
Presbyterian Healthcare filed the Complaint in early 2014, asking the Court to "declare that the parties' dispute is arbitrable under FINRA Rules and issue an order compelling Defendant to submit to FINRA arbitration." Complaint ¶ 3, at 2. Presbyterian Healthcare asserts that this action is necessary, because "Goldman Sachs has filed suit seeking to enjoin every, or virtually every, other suit brought by a municipal issuer similarly situated to [Presbyterian Healthcare]." Complaint ¶ 28, at 10.
Presbyterian Healthcare asserts that it hired Goldman Sachs "as a strategic capital adviser wherein Goldman Sachs would provide ongoing advice concerning `capital planning, credit strategy, rating agency and investor relations, rating agency and investor relations, raising capital, capital markets/derivatives implementation, and strategic advisory services.'" Complaint ¶ 11, at 4. Presbyterian Healthcare asserts that during their "ongoing business relationship" between 2005 and 2008, Goldman Sachs advised Presbyterian Healthcare on "at least four different bond issues and at least two different series of derivative transactions." Complaint ¶ 3, at 4. Presbyterian Healthcare asserts that, in 2006, it was considering ways to take advantage of advantageous interest rates on longterm municipal debt, and Goldman Sachs recommended that, "[r]ather than refund the 2004 ARS Bonds," Presbyterian Healthcare "synthetically fix" the 2004 bonds' rates by entering four interest rate swaps with a Goldman Sachs affiliate. Complaint ¶ 13, at 4-5. By paying a fixed rate to the affiliate in exchange for variable-rate payments based on LIBOR floating rate, Presbyterian Healthcare expected its debt obligation to comprise only the fixed rate, because the LIBOR rate would "closely mirror" the rate Presbyterian Healthcare owed to its bondholders. Complaint ¶ 13, at 5. Presbyterian Healthcare asserts that this plan did not go smoothly: "[U]nbeknownst to [Presbyterian Healthcare], from the time of the issuance of the 2004 ARS Bonds through early 2006, when the [s]waps were being considered, the ARS market had deteriorated significantly," and Goldman Sachs often had to artificially prop up the market by placing "support bids" that "creat[ed] the illusion of sufficient bidders when they did not exist." Complaint ¶ 15, at 5-6. Presbyterian Healthcare asserts:
Complaint ¶ 16, at 6. Presbyterian Healthcare asserts that, when Goldman Sachs and other banking firms "abandoned the ARS market, ... the ARS market quickly collapsed," and it "had to restructure the 2004 ARS Bonds at a significant cost, terminate some of the Swaps and continue to be damaged through the payment of elevated rates on the restructured debt and payments on the remaining Swaps." Complaint ¶ 17, at 6.
Presbyterian Healthcare contends that it has a right arbitrate with Goldman Sachs under the FINRA Code of Arbitration, because Goldman Sachs is a member of FINRA, and because Presbyterian Healthcare is Goldman Sachs' customer. See Complaint ¶¶ 19-28, at 7-10. Presbyterian Healthcare argues that it is a "customer" for FINRA Rule 12200 purposes, because "[a] number of federal courts around the country have held that an issuer of securities is the customer of its underwriter." Complaint ¶ 22, at 8. Presbyterian Healthcare cites Patten Securities Corp. v. Diamond Greyhound & Genetics, Inc., 819 F.2d 400 (3d Cir.1987), abrogated on other grounds by Delgrosso v. Spang & Co., 903 F.2d 234, 236 n. 2 (3d Cir.1990), which upheld a district court's order compelling an underwriter to arbitrate at the National Association of Securities Dealers (n/k/a FINRA), noting that the NASD had previously stated: "An issuer of securities should be considered a public customer of a member firm where a dispute arises over a proposed underwriting."
Goldman Sachs answered Presbyterian Healthcare's Complaint in September, 2014. See Goldman, Sachs & Co.'s Answer, Defenses and Counterclaims to Plaintiffs' Complaint for Declaratory and Injunctive Relief, filed September 30, 2014 (Doc. 26)("Answer"). Goldman Sachs asserts that the Broker-Dealer Agreement between it and Presbyterian Healthcare contains an "exclusive forum-selection clause requiring that `all actions and proceedings arising under th[e] Broker-Dealer Agreement or any of the transactions contemplated thereby shall be brought in the United States District Court in the County of New York,' and not in this Court." Answer ¶ 10, at 2-3 (alteration in original Answer but not in quoted source). Goldman Sachs "admits and avers" that the Securities and Exchange Commission ("SEC") "has investigated the practices and procedures of various financial institutions, including Goldman Sachs, with respect to the ARS market ... [,]" but that "the SEC investigation resulted in a highly publicized market-wide settlement which amplified disclosure of the very practices of which Presbyterian Healthcare now alleges it was unaware at the time." Answer ¶ 16, at 3-4. Goldman Sachs asserts that, consequently, "PHS's claims and theories are baseless, particularly in light of its own disclosures and information at their [sic] disposal concerning `support bids' and the potential for failed auctions." Answer ¶ 29, at 19. Goldman Sachs also challenged the applicability of W. Va. Univ. Hosp., arguing that the Court of Appeals for the Second Circuit "affirmed the [district court's decision] only in part and expressly declined to affirm on the basis of the district court's determination that a municipal auction rate securities issuer was a `customer' of the underwriter as contemplated by FINRA Rule 12200." Answer, ¶ 24 at 5 (citing UBS Fin. Servs., Inc. v. W. Virginia Univ. Hospitals, Inc., 660 F.3d 643, 650 (2d Cir.2011)).
Goldman Sachs asserts eleven defenses: (i) Presbyterian Healthcare violated the forum-selection clause in the Broker-Dealer Agreement by filing the Complaint outside of the Southern District of New York; (ii) "PHS lacks standing to bring this action"; (iii) "[t]his Court lacks subject matter jurisdiction over this action"; (iv) "[t]his Court is an improper venue for PHS's claims"; (v) Presbyterian Healthcare is not Goldman Sachs' customer under FINRA; (vi) Presbyterian Healthcare's Complaint fails to state a claim; (vii) "PHS's claims are barred, in whole or in part, by the doctrine of unclean hands"; (viii) "PHS's claims are barred, in whole or in part, by the doctrine of laches"; (ix) "PHS's claims are barred, in whole or in part, by the doctrines of equitable estoppel, waiver and/or other equitable doctrines"; (x) "PHS's claims are barred by PHS's own breaches of contract"; and (xi) "PHS's claims are barred by the statute of limitations." Answer at 8-9.
Goldman Sachs asserts that Presbyterian Healthcare seeks arbitration under FINRA for purely strategic purposes:
Answer ¶ 24, at 11. Goldman Sachs notes that Presbyterian Healthcare filed its arbitration request with FINRA "almost six years after the first and only of PHS's ARS auctions failed, and long past the expiration of the four-year statutes of limitation governing its claims." Answer ¶ 26, at 18.
Goldman Sachs requests that the Court: (i) dismiss Presbyterian Healthcare's Complaint "on the merits, in its entirety and with prejudice"; (ii) declare that FINRA "is not an appropriate forum to resolve a dispute between Goldman Sachs and PHS pursuant to their contracts related to ARS," and that "FINRA has no jurisdiction to adjudicate the FINRA Arbitration"; (iii) "[p]reliminarily and permanently enjoin[] PHS from pursuing any claims against Goldman Sachs in the FINRA Arbitration"; (iv) award Goldman Sachs suit's costs; and (v) grant "such other relief as may be just and proper." Answer ¶¶ 1-5, at 22.
Goldman Sachs explains that it seeks this relief because
Answer ¶ 33, at 20. Goldman Sachs contends it will suffer irreparable harm if Presbyterian Healthcare is not enjoined from pursuing its FINRA claim, because
Answer ¶ 39, at 21-22.
On the same day it filed its Answer, Goldman Sachs submitted the Motion. In the Motion, Goldman Sachs argues:
Motion at 1-2 (emphasis in original). Additionally, Goldman Sachs contends that Presbyterian Healthcare filed its claim with FINRA two years after the statutes of limitations lapsed on Goldman Sachs' alleged acts,
Motion Memo. at 8-9 (quoting Atlantic Marine, 134 S.Ct. at 581-83).
Goldman Sachs asserts that there is nothing "exceptional" about this case. Motion at 9. First, Goldman Sachs asserts, "there is no dispute that the forum-selection clause in the Broker-Dealer Agreement is valid" because: (i) "it was negotiated at arm's length between the parties, and PHS was represented by experienced legal counsel," Motion at 9-10; and (ii) "forum-selection clauses are `prima facie valid,'" Motion at 10 (quoting Milk `N' More v. Beavert, 963 F.2d 1342, 1346 (10th Cir.1992)).
Second, Goldman Sachs argues that the exclusive forum-selection clause is mandatory by its use of the word "shall." Motion at 10 (citing Goldman, Sachs & Co. v. Golden Empire Sch. Fin. Auth., 922 F.Supp.2d 435, 443 (S.D.N.Y.2013) (Sullivan, J.), aff'd, 764 F.3d 210, 215 (2d Cir. 2014) (Walker, J., joined by Katzmann & Droney, JJ.)). Third, Goldman Sachs argues that the phrase "all actions and proceedings" in the Broker-Dealer Agreement "encompasses this action (and, for that matter, the FINRA Arbitration proceeding)," because Presbyterian Healthcare's FINRA claims "are inextricably related to-and `arise out of'-Goldman Sachs' alleged conduct as broker-dealer for PHS's ARS." Motion at 10-11. Goldman Sachs asserts that "[a]ll courts to consider materially identical forum-selection clauses in the Second Circuit have readily concluded that claims about underwriters' and broker-dealers' conduct involving ARS (such
Additionally, Goldman Sachs asserts that a "merger clause" in the Broker-Dealer Agreement "further confirms that PHS's claims arise out of that Agreement, providing that it, `and the other agreement and instruments executed and delivered in connection with the issuance,' constitute the `entire agreement between the parties' relating to PHS' ARS issuance." Motion at 11 (emphases in Motion but not in quoted source)(quoting Broker-Dealer Agreement at 13).
Goldman Sachs also argues that Presbyterian Healthcare cannot point to any public-interest factors favoring a denial of the Motion. See Motion at 13. First, it asserts that these cases do not overburden the Southern District of New York, as "in the past two years alone the Southern District of New York heard and decided the issue posed by Presbyterian Healthcare's Complaint in four nearly identical cases, and each of them was decided within ten months or less from the date of filing." Motion at 13. Second, Goldman Sachs says that, because Presbyterian Healthcare's claims primarily concern financial transactions in New York, the case lacks a local interest for keeping the dispute in New Mexico. See Motion at 13. Third, it contends that both the Court and the Southern District of New York "are equally `at home with the law' governing this action [as] PHS's [c]omplaint ... is brought pursuant to federal statute (28 U.S.C. §§ 2201 and 2202) and a Federal Rule of Civil Procedure (Rule 57)." Motion at 13.
Rather, Goldman Sachs argues that public interest factors favor honoring the forum-selection clause. See Motion at 13-14. First, it argues doing so protects the parties' bargained-for expectations. Motion at 13-14. Second, it contends that applying the clause would prevent "the very sort of gamesmanship and forum shopping that Atlantic Marine is meant to avoid." Motion at 14. Goldman Sachs argues:
Motion at 14 (internal citations omitted).
Presbyterian Healthcare responded to the Motion nearly two months later. See Plaintiffs' Opposition to Defendant's Motion to Transfer Pursuant to 28 U.S.C. § 1404(a) at 15, filed November 24, 2014 (Doc. 35)("Response"). In its Response, Presbyterian Healthcare argues that it filed its Complaint in the appropriate venue because: (i) Goldman Sachs has a duty to arbitrate with Presbyterian Healthcare under FINRA, see Response at 7; and (ii) the FINRA arbitration is pending in New Mexico, and district courts can compel arbitration only within their own districts, see Response at 14.
Presbyterian Healthcare asserts that it is Goldman Sachs' "customer" for several reasons. Response at 9-10. First, the FINRA Code of Arbitration "defines `customer' broadly to exclude only one group, `broker or dealer.' In the light of such a broad definition courts have consistently rejected constructions that would narrow or limit the rule's scope." Response at 9 (citing Wash. Square Sec., Inc. v. Aune, 385 F.3d 432, 436 (4th Cir.2004); John Hancock Life Ins. Co. v. Wilson, 254 F.3d 48, 59 (2d Cir.2001) (Meskill, J., joined by Parker, J.)).
Second, Presbyterian Healthcare argues that its relationship with Goldman Sachs is consistent with the "plain meaning" of the term "customer." Response at 10 (citing Webster's Third New International Dictionary 559 (3d ed.2002)(defining "customer" as "one that purchases some commodity or service")). This definition is an appropriate description, Presbyterian Healthcare asserts, because "Goldman represented to [Presbyterian Healthcare] that it was going to provide [Presbyterian Healthcare with] a variety of services and that [Presbyterian Healthcare] did, indeed, purchase those services from Goldman," and "those purchased services related directly to the issuance of securities." Response at 10. Presbyterian Healthcare argues:
Response at 10-11. Third, Presbyterian Healthcare argues that "[f]ederal courts around the country have universally held that an issuer of securities is the customer of its underwriter" for the purposes of arbitration under FINRA — or its predecessor NASD. Response at 11-12.
Presbyterian Healthcare further argues that "even if it were a close call as to whether [Presbyterian Healthcare] were customers, which it is not, the law favoring arbitration would require an interpretation of the FINRA Arbitration Code that includes [Presbyterian Healthcare]," because of a policy presumption in favor of arbitration when the issue is ambiguous. Response at 13 (citing Volt Info. Sci., Inc. v. Bd. of Trustees of Leland Stanford Jr. Univ., 489 U.S. 468, 475-76, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989) ("[D]ue regard must be given to the federal policy favoring arbitration, and ambiguities as to the scope of the arbitration clause itself resolved in favor of arbitration."); Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985) ("[A]ny doubts concerning the scope of arbitrable issues [should] be resolved in favor of arbitration."); United Steelworkers v. Warrior & Gulf Nav. Co., 363 U.S. 574, 584-85, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960) (finding
Presbyterian Healthcare argues that it is "entitled, and in fact required, to bring action in this venue to enforce their arbitration rights," because the FINRA action was in New Mexico, and federal courts "have consistently held that only the district court in the location of the arbitration can compel arbitration." Response at 14.
Presbyterian Healthcare contends that the Broker-Dealer Agreement's forum-selection clause does not require that Southern District of New York try this dispute, because
Response at 14-15.
Presbyterian Healthcare argues that, "[i]n seeking to enjoin the FINRA Arbitration, Goldman attempts to envelope a complex advisory relationship that has spanned many years and multiple transactions under a single agreement that governs what is essentially one administrative task." Response at 15. Presbyterian Healthcare contends that its dispute relates to Goldman Sachs' broader role as Presbyterian Healthcare's investment advisor, and is not limited to Goldman Sachs' issuing of the ARS bonds and facilitating the interest rate swaps. See Response at 15. Presbyterian Healthcare describes this relationship as beginning in 2004, when Goldman Sachs "advised PHS on its capital formation strategy ... [which] culminated in the issuance of the 2004 ARS Bonds[,] included the structuring and issuance of the debt, and included advisory services and recommendations regarding how much debt to issue." Response at 15-16. Presbyterian Healthcare asserts that Goldman Sachs not only facilitated the issuing of the ARS bonds and the interest rate swaps, but also advised Presbyterian Healthcare about undertaking those transactions. See Response at 16-17.
Presbyterian Healthcare asserts that its arbitration claims relate to transactions not contemplated by the Broker-Dealer Agreement. See Response at 21. Presbyterian Healthcare notes that the bulk of its arbitration claims concern the interest rate swaps in 2006, which, Presbyterian Healthcare asserts, "could not have been `contemplated' by the 2004 [Broker-Dealer] Agreement as they were not recommended until years later." Response at 21.
Presbyterian Healthcare contends its grievances arise from Goldman Sachs' role as an advisor. See Response at 15. For instance, in 2006, when Presbyterian Healthcare wished to take advantage of favorable interest rates by locking in low rates on its variable rate debt,
Response at 16 (emphasis in Proposal)(quoting Proposal) (citations omitted). Additionally, Presbyterian Healthcare contends
Presbyterian Healthcare asserts that the Broker-Dealer Agreement is "merely an ancillary agreement to Goldman underwriting and advising on the 2004 ARS Bonds and has nothing to do with this case." Response at 20. Presbyterian Healthcare notes that it also entered a broker-dealer agreement with Citigroup Global Markets, Inc., and argues:
Response at 20. Presbyterian Healthcare also describes the Broker-Dealer Agreement with Goldman Sachs as a
Response at 17.
Presbyterian Healthcare notes that it and Goldman Sachs entered into many other agreements relating to the 2004 ARS bonds, and only the Broker-Dealer Agreement stipulates that New York law shall apply. See Response at 18. The rest, with one exception,
Additionally, Presbyterian Healthcare notes that the NMHELC was not a party to the Broker-Dealer Agreement and, thus, the Court cannot compel the NMHELC to litigate in New York. See Response at 21-22. The only agreement between Goldman Sachs and the NMHELC is the Underwriter Agreement, which, Presbyterian Healthcare asserts, "does not include a forum selection clause, but specifically states that it is governed by New Mexico law." Response at 21. As such, "[t]here is no way to interpret the two agreements together such that the forum selection clause in the Broker-Dealer Agreement can be read to apply to any and all disputes arising under any and all
Finally, Presbyterian Healthcare argues that "a forum selection clause in a separate, narrow agreement does not supplant a broad, preexisting obligation among parties to arbitrate." Response at 21-22. Presbyterian Healthcare cites a case from the United States Court of Appeals for the Fifth Circuit which found that, "`in the absence of a contrary expression of intent,' [a] stock purchase agreement was at least `susceptible to an interstation' favoring arbitration." Response at 22 (quoting Personal Sec. & Safety Sys. Inc. v. Motorola Inc., 297 F.3d 388, 394-95 (5th Cir.2002) (Jolly, J., joined by Barksdale & Jones, JJ.)). Presbyterian Healthcare also notes that the Fourth Circuit, faced with similar facts and contract language as in this case, rejected "the underwriters' argument that the broker dealer agreements superseded, displaced, or waived the requirement for FINRA arbitration," finding instead that the broker-dealer agreement "[did] not supersede an existing obligation to arbitrate." Response at 23 (citing Carilion, 706 F.3d at 330). Presbyterian Healthcare notes "[t]hat decision was subsequently followed in a similar case" in UBS Securities LLC, v. Allina Health System, No. CIV 12-2090 MJD/JJG, 2013 WL 500373 (D.Minn. Feb. 11, 2013), but concedes that "there is currently a split among the Circuits as to whether the forum selection clause in such broker-dealer agreements can supersede or waive the right to FINRA arbitration." Response at 23.
Goldman Sachs replied a month later. See Reply Memorandum of Law in Further Support of Goldman, Sachs & Co.'s Motion to Transfer Pursuant to 28 U.S.C. § 1404(a), filed December 22, 2014 (Doc. 36)("Reply"). Goldman Sachs argues that whether FINRA Rule 12200 is a written agreement to arbitrate with customers is irrelevant, because
Reply at 3 (emphases in original). Goldman Sachs notes that "numerous courts — most importantly the Second Circuit — have considered identical forum selection clauses and identical FINRA arbitration claims and held that the forum selection clauses supersede FINRA Rule 12200 and require all claims to be litigated in federal court." Reply at 3. As such, "PHS' desire to avoid a transfer to SDNY ... does not constitute an `extraordinary circumstance' under Atlantic Marine. To the contrary, Atlantic Marine is intended to prevent the precise type of gamesmanship in which PHS is engaged." Reply at 4 (emphasis in original).
Goldman Sachs disputes Presbyterian Healthcare's reading of Carilion, arguing that the Fourth Circuit "assumed that the ARS issuer's claims were within the scope of the forum selection clause ..., but determined that the term `all actions and proceedings' did not encompass arbitration." Reply at 4 (emphasis in original)(citing Carilion, 706 F.3d at 329-30). Additionally, Goldman Sachs argues that, rather than finding that "all actions and proceedings" did not cover court actions such as the one before the Court, Carilion "interpret[s] an identical forum selection clause to `require that any litigation arising
Goldman Sachs also argues that Presbyterian Healthcare did not need to file its Complaint in the United States District Court for the District of New Mexico to compel Goldman Sachs to arbitrate, because Goldman Sachs "has never refused" to do so. Reply at 5-6. Rather, Goldman Sachs notes both it and Presbyterian Healthcare "agreed to stay the FINRA Arbitration `pending the outcome of Goldman Sachs' challenge to FINRA's jurisdiction.'" Reply at 5 (quoting Letter from Goldman Sachs to FINRA at 1). Goldman Sachs argued that, even if Presbyterian Healthcare needed to compel Goldman Sachs to arbitrate, Presbyterian Healthcare is not required to do so in the District of New Mexico, because "courts in the Second Circuit consider at the outset whether arbitration is required even if the arbitration would occur in another jurisdiction, and require an order to compel from another court." Reply at 6.
Goldman Sachs argues that the Broker-Dealer Agreement applies to Presbyterian Healthcare's FINRA arbitration claims, because "all of PHS' allegations of wrongdoing... depend on Goldman Sachs' role in the issuance and broker-dealering of PHS' ARS." Reply at 7 (emphases omitted). Goldman Sachs asserts that courts have "repeatedly rejected" similar attempts by municipal debt issuers to "reframe identical allegations to prevent them from being governed by identical forum selection clauses." Reply at 7-8 (citing Golden Empire, 764 F.3d at 216; Goldman, Sachs & Co. v. City of Reno, 747 F.3d 733, 747 (9th Cir.2014) (Bybee, J., joined by Schroeder, J.)("Reno")). Goldman Sachs asserts:
Reply at 8.
Goldman Sachs also argues that Presbyterian Healthcare's "effort to portray its claims as being principally related to certain interest rate swap agreements ... (not the 2004 ARS issuance and subsequent auctions) is unavailing," because "all of [Presbyterian Healthcare's] purported theories of liability, including as they relate to the swaps, [rests] on Goldman Sachs' failure to disclose its support bidding practice as broker-dealer and the injuries PHS allegedly suffered as a result."
Reply at 9 (quoting Complaint ¶ 16, at 6)(second alteration in original).
Goldman Sachs argues that it is irrelevant whether it provided a long-term advisory role for Presbyterian Healthcare, because Presbyterian Healthcare "is not suing about any transaction other than the 2004 ARS issuance and Goldman Sachs' conduct in subsequent years under the Broker-Dealer Agreement." Reply at 10. Goldman Sachs contends that Presbyterian Healthcare cannot plausibly argue that Goldman Sachs "entered into an advisory relationship with PHS separate from its role as underwriter and broker-dealer for the PHS' ARS," because Presbyterian Healthcare's evidence is weak, comprising "only ... a cover letter to a request for proposal for underwriting services sent to PHS ... before its ARS even were issued." Reply at 10.
Reply at 10 (emphases in original)(quoting January 2006 Discussion Materials Disclaimer at 3, dated January 23, 2006, filed December 22, 2015 (Doc. 36-4)).
Goldman Sachs also argues that, just because Presbyterian Healthcare chose not to seek arbitration with Citigroup Global Markets — with whom Presbyterian Healthcare also entered into a broker-dealer agreement — does not indicate that Goldman Sachs provided advisory services beyond the Broker-Dealer Agreement, and, as such, a decision regarding Citigroup Global Markets "has no bearing on the question of whether PHS' claims arise from the Broker-Dealer Agreement it entered into with Goldman Sachs." Reply at 10.
Equally irrelevant, in Goldman Sachs' view, is the fact that it and Presbyterian Healthcare entered into many other agreements beyond the Broker-Dealer Agreement, because "Goldman Sachs' obligations as they relate to auctions for PHS' ARS — precisely what PHS challenges in the FINRA Arbitration and here — is the subject of the Broker-Dealer Agreement and the `transactions contemplated [th]ereby.'" Reply at 10-11 (quoting Broker-Dealer Agreement at 14)(second alteration in original). To support this argument, Goldman Sachs notes that (i) the Broker-Dealer Agreement "encompasses `all actions and proceedings arising out of this [Broker-Dealer
Goldman Sachs also disputes Presbyterian Healthcare's argument that the Broker-Dealer Agreement's forum-selection clause does not bind NMHELC because the NMHELC did not sign the agreement. See Reply at 11. Goldman Sachs contends:
Reply at 11 (internal citations omitted)(quoting Mozingo v. Trend Pers. Servs., No. CIV 10-4149 JTM, 2011 WL 3794263, at *6 (D.Kan. Aug. 25, 2011)).
Goldman Sachs also asserts that "[t]he compromised credibility of PHS' argument is starkly illustrated" by Presbyterian Healthcare's reference to an auction agreement stipulating Minnesota as its exclusive forum selection, because neither Goldman Sachs nor Presbyterian Healthcare is a signatory to the agreement. Reply at 12. Finally, Goldman Sachs argues that "[i]t is of no moment that some of [the] documents may have separate choice of law clauses because it is not `conflicting' to have different governing laws for different aspects of a transactions." Reply at 12.
The Court held a hearing on March 5, 2015. At the hearing, Goldman Sachs asserted that Presbyterian Healthcare's arbitration complaint "is one of dozens and dozens of arbitrations ... filed across the country ... by issuers of auction rate securities against banks like Goldman Sachs, who acted as underwriters and the broker-dealers." Tr. at 5:15-22 (Schwartz). Goldman Sachs contended: "[N]one of the[] issuers thought in February of 2008, when they supposedly suffered their damages or anytime shortly after that, to bring claims against the banks. And what happened was, several years later, plaintiffs' counsel went around the country marketing these claims." Tr. at 8:16-24 (Schwartz). Goldman Sachs asserted that Presbyterian Healthcare filed its claim for FINRA arbitration, because FINRA offered more limitation-period flexibility, while a four-year statute of limitations would have barred its claims in federal court. See Tr. at 9:1-16 (Schwartz). Goldman Sachs asserted that Presbyterian Healthcare filed its Complaint before Goldman Sachs knew Presbyterian Healthcare had filed a request with FINRA for arbitration. See Tr. at 12:5-10 (Schwartz). Goldman Sachs speculated that, given the unhelpful precedent in the Second Circuit, Presbyterian Healthcare is "hoping that they could get a different result either from this Court or from the Tenth Circuit than from the Southern District of New York." Tr. at 12:13-20 (Schwartz).
Presbyterian Healthcare argued that Goldman Sachs is engaging in gamesmanship,
Presbyterian Healthcare argued further that the Broker-Dealer Agreement's "forum-selection clause and the merger clause are completely separate, [and] hav[e] nothing to really do with one another." Tr. at 29:22-24 (Edwards). Presbyterian Healthcare argued that the two clauses have different scopes: the merger clause extends to "the subject matter hereof," Tr. at 31:13-23 (Edwards)(quoting Broker-Dealer Agreement at 13), whereas the forum-selection clause covers "all actions and proceedings arising out of this Broker-Dealer Agreement or any of the transactions contemplated hereby," Tr. at 29:25-30-11 (Edwards)(quoting Broker-Dealer Agreement at 14).
Presbyterian Healthcare argued that a "traditional merger clause" typically functions to establish that the document represents "the final agreement, and anything else ... agreed to prior to this is merged into this [agreement]," Tr. at 34:11-15 (Edwards), and the purpose of a merger clause is "for a parol evidence issue," Tr. at 63:3-4 (Edwards). Presbyterian Healthcare asserted that "[t]his merger clause does not, in any way, shape, or form say the forum-selection clause ... also applies to the whole rest of our relationship." Tr. at 34:25-35:3 (Edwards). Presbyterian Healthcare also argues that similar merger clauses have "been ... misappli[ed]" by courts who "heard `a merger clause' and said, oh, well, all these agreements ... [are] merged into this one." Tr. at 47:7-12 (Edwards).
Goldman Sachs countered, however, that the merger clause's language — stipulating that it covered "instruments executed and delivered" — indicates that it covered more than just any potential oral agreements that may have existed, and "obviously ... [included] other written agreements that deal with the 2004 issuance." Tr. at 70:5-14 (Schwartz). Goldman Sachs further argued that, if the forum-selection clause relates only to "transactions that occur under the Broker-Dealer Agreement," then the phrase "transactions contemplated hereby" would be unnecessary. Tr. at 71:3-16 (Schwartz). Therefore, Goldman Sachs argued that the phrase "transactions contemplated hereby" would have "to have meaning separate from the Broker-Dealer Agreement." Tr. at 72:19-21 (Schwartz).
Presbyterian Healthcare also asserted that:
Tr. at 59:9-17 (Edwards). Goldman Sachs disputed this assertion, arguing that Presbyterian Healthcare only now is trying to frame the issue around the 2006 interest rate swaps, when it made no such distinction in its FINRA arbitration complaint.
The Court asked Presbyterian Healthcare, if it were to litigate only on the small portion of damages sustained from the 2004 transactions, whether the Broker-Dealer Agreement's forum selection and merger clause would cover such an action. See Tr. at 60:7-12 (Court). Specifically, the Court asked Presbyterian Healthcare whether the forum-selection clause's phrase "transactions contemplated hereby" would apply to any of the ARS bonds that the Broker-Dealer Agreement specifically mentioned. Tr. at 64:19-24 (Court). Presbyterian Healthcare replied that they would not be included, see Tr. at 64:25 (Edwards), because the phrase "contemplated transactions" refers only to the auction procedures outlined in the Broker-Dealer Agreement, see Tr. at 65:15-21 (Edwards). Presbyterian Healthcare further argued that "[a]ny other interpretation of it means it applies to every transaction ever between the parties, and that's not what this is intended to do." Tr. at 65-25-66: 3 (Edwards).
Presbyterian Healthcare also asserted that "whether Goldman Sachs was the broker dealer or not is irrelevant. They were a market participant who was advising [Presbyterian Healthcare]." Tr. at 43:24-44:2 (Edwards). Moreover, Presbyterian Healthcare asserts that the Broker-Dealer Agreement, at its core, is "really an agreement between the auction agent and the broker-dealer. It's really not even an agreement between [Presbyterian Healthcare], which signed on it. [Presbyterian Healthcare] has no obligations under this agreement." Tr. at 30:12-18 (Edwards).
Additionally, Presbyterian Healthcare contended that
Tr. at 56:8-14 (Edwards). Goldman Sachs countered that Presbyterian Healthcare offered no case law to support this argument, and further asserted that, in any case, the bond purchase agreement "specifically talks about the fact that there's going to have to be a broker-dealer agreement," which means "the NMHELC knew there was going to be a broker-dealer agreement." Tr. at 75:14-21 (Schwartz).
"Venue is defined as the appropriate district court in which to file an action." Whiting v. Hogan, 855 F.Supp.2d 1266, 1282 (D.N.M.2012) (Browning, J.) (citing NLRB v. Line, 50 F.3d 311, 314 (5th Cir.1995)). The purpose of venue is to assure that lawsuits are filed in appropriately convenient courts for the matters raised and for the parties involved in the action. See Leroy v. Great W. United Corp., 443 U.S. 173, 185, 99 S.Ct. 2710, 61 L.Ed.2d 464 (1979). Venue should not be confused with subject-matter jurisdiction, see Wachovia Bank v. Schmidt, 546 U.S. 303,
The default federal venue provision allows a plaintiff to file in either: (i) his or her state's district court, so long as all defendants are also residents of the state; or (ii) in the district "in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated." 28 U.S.C. § 1391(b)(1-2). If an action cannot be brought in either of those scenarios, a plaintiff may bring his or her action in "any judicial district in which any defendant is subject to the court's personal jurisdiction with respect to such action." 28 U.S.C. § 1391(b)(3).
"Congress enacted the federal change-of-venue statute, codified at 28 U.S.C. § 1404, to allow a district court to transfer an action filed in a proper, though not necessarily convenient, venue to a more convenient district." Whiting v. Hogan, 855 F.Supp.2d 1266, 1284 (D.N.M. 2012) (Browning, J.). Section 1404(a) vests "discretion in the district court to adjudicate motions to transfer according to individualized, case-by-case consideration of convenience and fairness." Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988) (quoting Van Dusen v. Barrack, 376 U.S. 612, 622, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964)).
"The statutory language guides the court's evaluation of the particular circumstances of each case and is broad enough to allow the court to take into account all factors relevant to convenience and/or the interests of justice." Research Automation, Inc. v. Schrader-Bridgeport Int'l, Inc., 626 F.3d 973, 977 (7th Cir.2010). The statute permits a "flexible and individualized analysis," and affords district courts the opportunity to look beyond a narrow or rigid set of considerations in their determinations. Stewart Org., Inc. v. Ricoh Corp., 487 U.S. at 29, 108 S.Ct. 2239.
Chrysler Credit Corp. v. Country Chrysler, Inc., 928 F.2d 1509, 1516 (10th Cir.1991) (internal quotation marks omitted). See Silver v. Brown, 678 F.Supp.2d 1187, 1204 (D.N.M.2009) (stating the factors that the courts consider in making a venue determination under § 1404(a)), aff'd in part and rev'd in part and remanded, 382 Fed. Appx. 723 (10th Cir.2010).
The "interest of justice" is a separate element of the transfer analysis that relates to the court system's efficient administration. Van Dusen v. Barrack, 376 U.S. at 626-27, 84 S.Ct. 805. "For this element, courts look to factors including docket congestion and likely speed to trial in the transferor and potential transferee forums; each court's relative familiarity with the relevant law; the respective desirability of resolving controversies in each locale; and the relationship of each community to the controversy." Research Automation, Inc. v. Schrader-Bridgeport Int'l, Inc., 626 F.3d at 977 (citations omitted). In some circumstances, "[t]he interest of justice may be determinative, warranting transfer or its denial even where the convenience of the parties and witnesses points toward the opposite result." Research Automation, Inc. v. Schrader-Bridgeport Int'l, Inc., 626 F.3d at 977 (citing Coffey v. Van Dorn Iron Works, 796 F.2d 217, 220-21 (7th Cir.1986)). The Tenth Circuit has interpreted the phrase — "if it is in the interest of justice" — to grant a district court discretion in making the decision to transfer the action. Driggers v. Clark, 422 Fed.Appx. 747, 749-50 (10th Cir.2011) (unpublished) (citing Trujillo v. Williams, 465 F.3d 1210, 1222 (10th Cir. 2006)).
In contract cases, "the role of the court is to give effect to the intention of the contracting parties." Bogle Farms, Inc. v. Baca, 1996-NMSC-051, ¶ 21, 122 N.M. 422, 925 P.2d 1184, 1190. "The primary objective in construing a contract is not to label it with specific definitions or to look at form above substance, but to ascertain and enforce the intent of the parties as shown by the contents of the instrument." Bogle Farms, Inc. v. Baca, 1996-NMSC-051, ¶ 21, 122 N.M. 422, 925 P.2d 1184 (citing Shaeffer v. Kelton, 1980-NMSC-117, ¶ 8, 95 N.M. 182, 619 P.2d 1226, 1229). "The parol evidence rule `bars admission of evidence extrinsic to the contract to contradict and perhaps even supplement the writing.'" Mem'l Med. Ctr., Inc. v. Tatsch Const., Inc., 2000-NMSC-030, ¶ 16, 129 N.M. 677, 12 P.3d 431, 437 (citation omitted). If a contract is ambiguous, however, "evidence will be admitted to aid in interpreting the parties' expressions." C.R. Anthony Co. v. Loretto Mall Partners, 1991-NMSC-070, ¶ 12, 112 N.M. 504, 817 P.2d 238, 242 (citation omitted). "On the other hand, if the court determines that the contract is clear and unambiguous on its face, evidence of the circumstances surrounding the transaction is inadmissible to vary or modify its terms." C.R. Anthony Co. v. Loretto Mall Partners, 1991-NMSC-070, ¶ 12, 112 N.M. 504, 817 P.2d 238 (emphasis in original) (citation omitted).
The question whether an agreement contains an ambiguity is a matter of law. See Mark V., Inc. v. Mellekas, 114 N.M. 778, 781, 845 P.2d 1232, 1235 (1993) (citing Levenson v. Mobley, 106 N.M. 399, 401, 744 P.2d 174, 176 (1987)). "An ambiguity exists in an agreement when the parties' expressions of mutual
The Court has previously stated:
Knight Oil Tools, Inc. v. Unit Petrol. Co., No. CIV 05-0669 JB/ACT, 2005 WL 2313715, at *2 (D.N.M. Aug. 31, 2005) (Browning, J.) (citations omitted)(citing 17 James Wm. Moore, Moore's Federal Practice §§ 111.04[3][d], 111.36[5][a], at 111-42 to 111-43, 111-179 (3d ed.2004)). Accord Lambert v. Kysar, 983 F.2d 1110, 1113 n. 2 (1st Cir.1993) ("[A] valid forum selection clause operates to render venue improper, not only under 28 U.S.C. § 1391 [the general venue statute] but also under 28 U.S.C. § 1441(a) [the removal statute]."). See also Int'l Software Sys., Inc. v. Amplicon, Inc., 77 F.3d 112, 113-15 (5th Cir. 1996) (without discussing removal issue, affirming dismissal on improper venue grounds of action removed from state court when forum-selection clause specified state courts of another state as exclusive forum); Spradlin v. Lear Siegler Mgmt. Servs. Co., 926 F.2d 865, 866 (9th Cir.1991) (without discussing removal issue, affirming dismissal of removed action on improper venue grounds based on clause making Saudi Arabia exclusive forum).
"A motion to dismiss based on a forum selection clause frequently is analyzed as a motion to dismiss for improper venue under Fed.R.Civ.P. 12(b)(3)." K & V Sci. Co., Inc. v. Bayerische Motoren Werke Aktiengesellschaft ("BMW"), 314 F.3d 494
In Stewart Organization v. Ricoh Corp., the Supreme Court of the United States held: "Federal law, specifically 28 U.S.C. § 1404(a), governs the District Court's decision whether to give effect to the parties' forum selection clause." 487 U.S. at 32, 108 S.Ct. 2239. "The Tenth Circuit, however, has never addressed which law applies to diversity cases when interpreting forum-selection clauses in general and when addressing transfer to a federal forum in particular." Knight Oil Tools, Inc. v. Unit Petrol. Co., 2005 WL 2313715, at *9. Notably, the Tenth Circuit has not drawn rigid distinctions between state and federal law when interpreting forum-selection clauses, and has applied federal law when interpreting these clauses when "there are no material discrepancies between [state] law and federal common law on these matters." Excell, Inc. v. Sterling Boiler & Mech., Inc., 106 F.3d 318, 320-21 (10th Cir.1997) (not deciding the choice-oflaw issue between Colorado law and federal law). The Court has recognized in the past that "New Mexico state courts have not had much opportunity to address forum-selection clauses." Gen. Protecht Grp., Inc. v. Leviton Mfg. Co., No. CIV 10-1020 JB/LFG, 2010 WL 5559750, at *12 (D.N.M. Nov. 30, 2010) (Browning, J.). Relying on a case from the Tenth Circuit, the Court of Appeals of New Mexico has recognized that the general rule on enforcement of forum-selection clauses is that, "when venue is specified in a forum selection clause with mandatory or obligatory language, the clause will be enforced." Mueller v. Sample, 2004-NMCA-075, ¶ 11, 135 N.M. 748, 93 P.3d 769, 773 (Ct.App. 2004) (citing K & V Scientific Co., Inc. v. BMW, 314 F.3d at 499). The Court has previously found that, "although New Mexico has not addressed forum-selection clauses in particular, its decisions relating to choice-of-law provisions indicate that New Mexico would apply the same rule as the Tenth Circuit as well." Knight Oil Tools, Inc. v. Unit Petroleum Co., 2005 WL 2313715, at *9.
The Supreme Court has noted that there is substantial overlap between precedent interpreting the enforceability of arbitration agreements and forum-selection
The Supreme Court has rejected the notion that the parties must specifically negotiate a forum-selection clause for it to be enforceable. See Carnival Cruise Lines, Inc. v. Shute, 499 U.S. at 593, 111 S.Ct. 1522 ("[W]e do not adopt the Court of Appeals' determination that a nonnegotiated forum-selection clause in a form ticket contract is never enforceable simply because it is not the subject of bargaining."). Accord Marinechance Shipping, Ltd. v. Sebastian, 143 F.3d 216, 221 (5th Cir.1998) (holding that a forum-selection clause in a seaman's employment contract was enforceable even when the parties did not negotiate for the provision). Judge Martinez has similarly held:
Mann v. Auto. Protection Corp., 777 F.Supp.2d at 1240 (citations omitted)(citing Carnival Cruise Lines, Inc. v. Shute, 499 U.S. at 593-94, 111 S.Ct. 1522).
Courts have also imposed a high standard for negating a forum-selection clause on the basis that it is inconvenient. The Tenth Circuit has, for instance, stated:
Riley v. Kingsley Underwriting Agencies, Ltd., 969 F.2d at 958 (citations omitted). Judge Martinez has similarly held that, "[t]o invalidate a forum selection provision for reasons of inconvenience, however, a party must show that enforcement of the provision would cause an inconvenience `so serious as to foreclose a remedy.'" Mann v. Auto. Protection Corp., 777 F.Supp.2d at 1240 (quoting Riley v. Kingsley Underwriting Agencies, Ltd., 969 F.2d at 958).
"The difference between a mandatory and permissive forum selection clause is that `[m]andatory forum selection clauses contain clear language showing that jurisdiction is appropriate only in the designated forum.'" Am. Soda, LLP v. U.S. Filter Wastewater Grp., Inc., 428 F.3d 921, 926 (10th Cir.2005). "In contrast, permissive forum selection clauses authorize jurisdiction in a designated forum, but do not prohibit litigation elsewhere." Am. Soda, LLP v. U.S. Filter Wastewater Grp., Inc., 428 F.3d at 926-27 (citation omitted). In K & V Scientific Co. v. BMW, the Tenth Circuit adopted the majority rule for enforcing forum-selection clauses. See 314 F.3d at 500. Specifically, it concluded that, when venue is specified, such as when the parties designate a particular county or tribunal, and mandatory or obligatory language accompanies the designation, a forum-selection clause will be enforced as mandatory. See K & V Scientific Co. v. BMW, 314 F.3d at 499.
In Milk `N' More, Inc. v. Beavert, the Tenth Circuit held that the forum-selection clause was mandatory and precluded removal of the case to federal court. See 963 F.2d at 1343. In that case, the defendant appealed an order remanding the breach-of-contract action to a Kansas state court. See 963 F.2d at 1343. The federal district court concluded that an enforceable forum-selection clause in the agreement required the remand. See 963 F.2d at 1343. The clause in the Milk `N' More, Inc. v. Beavert agreement provided: "The parties herein have mutually agreed that said lease and the purchase option agreement contained herein, where applicable, shall be governed by the laws of the State of Kansas and the parties further agree that venue shall be proper under this agreement in Johnson County, Kansas." 963 F.2d at 1343. The federal district court granted the motion to remand on the ground that the contractual agreement contained an enforceable forum-selection clause, relying on the principle that forum-selection clauses are "prima facie valid and should be enforced" unless shown to be
In Milk `N' More, Inc. v. Beavert, the Tenth Circuit stated that it was mindful that a waiver of one's statutory right to be in federal court must be "clear and unequivocal." 963 F.2d at 1346 (quoting Regis Assocs. v. Rank Hotels (Mgmt.) Ltd., 894 F.2d 193, 195 (6th Cir.1990)). The Tenth Circuit acknowledged that, if there is ambiguity in the clause, the court should construe it against the drafter. See Milk `N' More, Inc. v. Beavert, 963 F.2d at 1346. Nevertheless, the Tenth Circuit said that "[s]uch clauses are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be unreasonable under the circumstances." 963 F.2d at 1346. The Tenth Circuit stated that the provision that "venue shall be proper under this agreement in Johnson County, Kansas" was "reasonably clear and the wording strongly points to the state court of that county." 963 F.2d at 1346. The Tenth Circuit said the use of the word "shall" generally indicates a mandatory intent unless a convincing argument to the contrary is made. 963 F.2d at 1346. In Milk `N' More, Inc. v. Beavert, the Tenth Circuit cited with approval Intermountain Systems, Inc. v. Edsall Construction Co., 575 F.Supp. 1195, 1198 (D.Colo.1983), stating that the case was particularly persuasive because it held that a similar clause: "It is agreed for purposes of this agreement, venue shall be in Adams County, Colorado." 963 F.2d at 1346. In K & V Scientific Co. v. BMW, the parties entered into a new agreement which, unlike their earlier agreement, contained a jurisdictional and choice-of-law provision, which stated: "Jurisdiction for all and any disputes arising out of or in connection with this agreement is Munich. All and any disputes arising out of or in connection with this agreement are subject to the laws of the Federal Republic of Germany." 314 F.3d at 496. The plaintiff filed suit, asserting various contract, tort, and statutory causes of action. See 314 F.3d at 497. The defendant removed the case to federal court, and moved to dismiss under to rules 12(b)(2) and 12(b)(3) of the Federal Rules of Civil Procedure for lack of personal jurisdiction and improper venue. The district court granted the defendant's motion to dismiss for improper venue. The district judge concluded that the forum-selection clause contained in the second confidentiality agreement was "unambiguous and enforceable," and demonstrated "[t]he parties' intent to locate jurisdiction for this action solely in the courts of Munich." 314 F.3d at 497. On appeal, the plaintiff argued that the clause's language contained no reference to venue, contained no language designating the courts in Munich as exclusive, and contained no language indicating that suit elsewhere is impermissible.
K & V Scientific Co. v. BMW, 314 F.3d at 498. The Tenth Circuit cited Milk `N' More, Inc. v. Beavert, stating that the Tenth Circuit there had concluded that a forum-selection clause stating "venue shall be proper under this agreement in Johnson County, Kansas" was mandatory. K & V Scientific Co. v. BMW, 314 F.3d at 498. The Tenth Circuit found, however, that no Tenth Circuit case had yet dealt with a forum-selection clause similar to the one at issue.
The Tenth Circuit stated that, "generally speaking," the Courts of Appeals are in "agreement" that the following formula is to be used in determining whether the selection clause is mandatory or permissive: "[W]here venue is specified [in a forum selection clause] with mandatory or obligatory language, the clause will be enforced; where only jurisdiction is specified [in a forum selection clause], the clause will generally not be enforced unless there is some further language indicating the parties' intent to make venue exclusive." K & V Scientific Co. v. BMW, 314 F.3d at 499 (alterations in original)(quoting Paper Express, Ltd. v. Pfankuch Maschinen GmbH, 972 F.2d 753, 757 (7th Cir.1992)). The Tenth Circuit analyzed language from six forum-selection clauses considered permissive, including four different forum-selection clauses wherein the provision used the word "shall" together with the name of a court. K & V Scientific Co. v. BMW, 314 F.3d at 499. The K & V Scientific Co. v. BMW formula for the four clauses using the word "shall" and considered permissive were:
K & V Scientific Co. v. BMW, 314 F.3d at 499. The other two examples of permissive clauses were:
K & V Scientific Co. v. BMW, 314 F.3d at 499. The Tenth Circuit in K & V Scientific Co. v. BMW also noted that the courts had held the following clauses to be mandatory:
K & V Scientific Co. v. BMW, 314 F.3d at 499-500 (footnote omitted).
Using the majority rule, the Tenth Circuit had little trouble concluding that the forum-selection clause at issue in K & V Scientific Co. v. BMW was permissive. See 314 F.3d at 500. The clause referred only to jurisdiction and did so in non-exclusive terms. See 314 F.3d at 500. A clause is mandatory, in accordance with K & V Scientific Co. v. BMW, only when the venue is specific with mandatory language. See 314 F.3d at 500. Mandatory language is venue coupled with such terms as "exclusive," "sole," or "only." 314 F.3d at 500. If the paragraph is ambiguous — capable of being construed as either permissive or mandatory — the paragraph is deemed to be permissive. The Tenth Circuit in K & V Scientific Co. v. BMW stated:
314 F.3d at 500-01 (citations omitted).
In an unpublished decision that followed K & V Scientific Co. v. BMW, the Tenth Circuit clarified that K & V Scientific Co. v. BMW decision addresses the issue
King v. PA Consulting Grp., Inc., 78 Fed. Appx. 645, 648 n. 2 (10th Cir.2003) (unpublished) (emphasis in original). The Tenth Circuit, in American Soda, LLP v. U.S. Filter Wastewater Group, Inc., has also recognized that a party to a contract can waive venue in federal court in a forum-selection clause, thus requiring remand the dispute to state court:
428 F.3d at 927.
Judge Martinez has stated: "Even though the Tenth Circuit has not addressed this issue, the United States Supreme Court has applied a forum selection provision in a case involving tort claims." Mann v. Auto. Protection Corp., 777 F.Supp.2d at 1243 (citing Carnival Cruise Lines, Inc. v. Shute, 499 U.S. at 588, 111 S.Ct. 1522). The Court has followed the same approach in Knight Oil Tools, Inc. v. Unit Petroleum Co., looking also at whether "the forum-choice provision involved ... is broad enough to include tort actions." 2005 WL 2313715, at *13 ("That the tort and breach of contract claim involve the same operative facts also counsels that the forum-selection clause apply to the tort claim."). In a case where there was a contract between a passenger and a cruise line the passenger asserted tort causes of action against the cruise line, the Supreme Court enforced a forum-selection clause against the passenger. See Carnival Cruise Lines, Inc. v. Shute, 499 U.S. at 588-90, 111 S.Ct. 1522 ("We granted certiorari to address the question whether the Court of Appeals was correct in holding that the District Court should hear respondents' tort claim.... Because we find the forum-selection clause to be dispositive of this question, we need not consider petitioner's constitutional argument as to personal jurisdiction."). "In addition, other Courts of Appeal have held that where tort claims `ultimately depend on the existence of a contractual relationship' between the parties, such claims are covered by a contractually-based forum selection clause, despite the `pleading of alternative non-contractual theories of liability.'" Mann v. Auto. Protection Corp., 777 F.Supp.2d at 1243 (quoting Coastal Steel Corp. v. Tilghman Wheelabrator Ltd., 709 F.2d 190, 203 (3d Cir.1983), overruled on other grounds by Lauro Lines, s.r.l. v. Chasser, 490 U.S. 495, 109 S.Ct. 1976, 104 L.Ed.2d 548 (1989))(citing Lambert v. Kysar, 983 F.2d at 1121-22).
Where a plaintiff invokes a federal district court's diversity jurisdiction,
When a claim sounds in contract, New Mexico will generally apply the choice-of-law rule of lex loci contractus — the law of the place of contracting. See Ferrell v. Allstate Ins. Co., 2008-NMSC-042, ¶ 52, 144 N.M. 405, 188 P.3d 1156, 1172. Like most states, however, "New Mexico respects party autonomy; the law to be applied to a particular dispute may be chosen by the parties through a contractual choice-of-law provision." Fiser v. Dell Computer Corp., 2008-NMSC-046, ¶ 7, 144 N.M. 464, 188 P.3d 1215, 1218 (citing N.M. Stat. Ann. § 55-1-301(A)). See United Wholesale Liquor Co. v. Brown-Forman Distillers Corp., 1989-NMSC-030, ¶ 11, 108 N.M. 467, 775 P.2d 233, 236. "[W]hen application of the law chosen by the parties offends New Mexico public policy," however, a New Mexico court "may decline to enforce the choice-of-law provision and apply New Mexico law instead." Fiser v. Dell Computer Corp., 2008-NMSC-046, ¶ 7, 144 N.M. 464, 188 P.3d 1215. "New Mexico courts will not give effect to another state's laws where those laws would violate some fundamental principle of justice." Fiser v. Dell Computer Corp., 2008-NMSC-046, ¶ 7, 144 N.M. 464, 188 P.3d 1215 (internal quotation marks omitted). Where the plaintiff has invoked the federal district court's diversity jurisdiction, the court will accept New Mexico's law regarding whether to honor a contractual choice-of-law provision. See MidAmerica Constr. Mgmt., Inc. v. MasTec N. Am., Inc., 436 F.3d 1257, 1260 (10th Cir.2006) ("In cases like this one, where subject matter jurisdiction is based on diversity of citizenship, federal courts must look to the forum state's choice-of-law rules to determine the effect of a contractual choice-of-law clause.").
If on the other hand, the underlying claim is categorized as a tort, "New Mexico courts follow the doctrine of lex loci delicti commissi — that is, the substantive rights of the parties are governed by the law of the place where the wrong occurred." Terrazas v. Garland & Loman, Inc., 2006-NMCA-111, ¶ 12, 140 N.M. 293, 142 P.3d 374. Where the elements of the underlying claim include harm, the place of the wrong is the place where the harm occurred. See First Nat'l Bank in Albuquerque v. Benson, 1976-NMCA-072, ¶ 9, 89 N.M. 481, 553 P.2d 1288, 1289 (referring to the rule as requiring application of "the law of the State of injury"); Guidance Endodontics, LLC v. Dentsply Int'l, Inc., 663 F.Supp.2d 1138, 1150-51 (D.N.M.2009) (Browning, J.).
The Federal Arbitration Act, 9 U.S.C. §§ 1 through 16 ("FAA"), governs the enforcement of arbitration clauses in commerce and maritime contracts. Section 2 of Title 9 of the United States Code provides:
9 U.S.C. § 2. "The FAA thereby places arbitration agreements on an equal footing with other contracts, and requires courts to enforce them according to their terms." Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 130 S.Ct. 2772, 2776, 177 L.Ed.2d 403 (2010) (citing Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443, 126 S.Ct. 1204, 163 L.Ed.2d 1038 (2006); Volt Info. Sci., Inc. v. Bd. of Trs. of the Leland Stanford Junior Univ., 489 U.S. 468, 478, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989)). "Like other contracts, however, they may be invalidated by `generally applicable contract defenses, such as fraud, duress, or unconscionability.'" Rent-A-Center, W., Inc. v. Jackson, 130 S.Ct. at 2776 (citing Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681, 687, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996)). The states have limited ability, however, to find arbitration clauses unconscionable. In AT & T Mobility LLC v. Concepcion, 563 U.S. 333, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011), the
Under § 4 of the FAA, a party "aggrieved" by another party's failure "to arbitrate under a written agreement for arbitration" may petition a federal court "for an order directing that such arbitration proceed in the manner provided for in such agreement." 9 U.S.C. § 4. If a party is aggrieved by another's refusal to arbitrate under a written agreement, the district court, upon petition, "shall hear the parties, and upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement." 9 U.S.C. § 4. Section 2, the "primary substantive provision of the Act," Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983), provides: "A written provision in ... a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. "If a party challenges the validity under § 2 of the precise agreement to arbitrate at issue, the federal court must consider the challenge before ordering compliance with that agreement under § 4." Rent-A-Center, W., Inc. v. Jackson, 130 S.Ct. at 2774.
"There is a strong federal policy encouraging the expeditious and inexpensive resolution of disputes through arbitration." Metz v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 39 F.3d 1482, 1488-89 (10th Cir.1994). See Southland Corp. v. Keating, 465 U.S. 1, 10, 104 S.Ct. 852, 79 L.Ed.2d 1 (1984) ("Congress declared a national policy favoring arbitration."); Hill v. Ricoh Ams. Corp., 603 F.3d 766, 771 (10th Cir.2010) ("[T]he FAA is a `congressional declaration of a liberal federal policy favoring arbitration agreements.'") (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. at 24, 103 S.Ct. 927). Congress enacted the FAA with the express purpose of granting arbitration agreements the same enforceability as any other contract provision. See Volt Info. Scis., Inc. v. Bd. of Trs. of the Leland Stanford Junior Univ., 489 U.S. at 474, 109 S.Ct. 1248 (stating that Congress designed the FAA to "overrule the judiciary's longstanding refusal to enforce agreements to arbitrate and place such agreements upon the same footing as other contracts"). When the applicability of arbitration is in dispute, "as a matter of federal law, any doubts concerning the
"[P]arties can agree to arbitrate `gateway' questions of `arbitrability,' such as whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy." Rent-A-Center, W., Inc. v. Jackson, 130 S.Ct. at 2777. The Supreme Court has explained that this rule "merely reflects the principle that arbitration is a matter of contract." Rent-A-Center, W., Inc. v. Jackson, 130 S.Ct. at 2777. The Supreme Court has described the term arbitrability as "whether the parties agreed to arbitrate [a] dispute." First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 942, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995) (Breyer, J.). Accord AT & T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 649, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) (describing arbitrability as "whether" an "agreement creates a duty for the parties to arbitrate the particular grievance"). The Supreme Court clarified that "a party's challenge to another provision of the contract, or to the contract as a whole, does not prevent a court from enforcing a specific agreement to arbitrate." Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. at 70-71, 130 S.Ct. 2772. In other words, "regardless of whether a contract as a whole is valid, agreements to arbitrate are severable from a larger contract, and may therefore be separately enforced and their validity separately determined." Quilloin v. Tenet HealthSystem Philadelphia, Inc., 673 F.3d 221, 229 (3d Cir.2012). As the Supreme Court has discussed:
Rent-A-Center, W., Inc. v. Jackson, 130 S.Ct. at 2777-78.
A district court must resolve the question of arbitrability before submitting a dispute to arbitration. See Oil, Chem. & Atomic Workers Int'l Union (AFL-CIO) v. Conoco, Inc., 241 F.3d 1299, 1305 (10th Cir.2001) ("The possibility that the district court might revisit the arbitrability question at the conclusion of the arbitration proceedings is not an adequate substitute for a pre-arbitration ruling."); Parrish v. Valero Retail Holdings, Inc., 727 F.Supp.2d 1266, 1273 (D.N.M.2010) (Browning, J.)("In the Tenth Circuit, and in the courts of New Mexico, the `existence of an agreement to arbitrate is a threshold matter which must be established before the FAA can be invoked.'" (quoting Avedon Eng'g Inc. v. Seatex, 126 F.3d 1279, 1287 (10th Cir.1997))).
The Supreme Court has held that "courts should not assume that the parties agreed to arbitrate arbitrability unless there is `clea[r] and unmistakabl[e]' evidence that they did so." Rent-A-Center, W., Inc. v. Jackson, 130 S.Ct. at 2777 (alterations in original). In other words:
First Options of Chi., Inc. v. Kaplan, 514 U.S. at 944, 115 S.Ct. 1920 (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. at 626, 105 S.Ct. 3346). The Tenth Circuit has stated that, "[o]f course, the most `clear and unmistakable' agreement to arbitrate the issue of arbitrability would be an express statement to that effect in the parties' contractual agreement to arbitrate disputes arising between them." Dean Witter Reynolds, Inc. v. Howsam, 261 F.3d 956, 968 (10th Cir.2001), rev'd on other grounds 537 U.S. 79, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002). The Tenth Circuit has held that the phrase in an "arbitration clause" that referred to the arbitrator handling "any and all disputes arising out of or relating to the contract" was not clear and unmistakable, because "there is no hint in the text of the clause or elsewhere in the contract that the parties expressed a specific intent to submit to an arbitrator the question whether an agreement to arbitrate exists." Riley Mfg. Co., Inc. v. Anchor Glass Container Corp., 157 F.3d 775, 780 (10th Cir.1998).
The United States Court of Appeals for the Eighth Circuit found the following language to be clear and unmistakable regarding arbitrability: "Any controversy concerning whether an issue is arbitrable shall be determined by the arbitrator(s)." Sadler v. Green Tree Servicing, LLC, 466 F.3d 623, 624 (8th Cir.2006). The Ninth Circuit found the following language to be clear and unmistakable regarding arbitrability:
Momot v. Mastro, 652 F.3d 982, 988 (9th Cir.2011) (emphasis in original).
The Second Circuit clarified that the First Options standard requiring clear and unmistakable evidence of the parties' intentions
The Court will grant the Motion and transfer this case to the Southern District of New York, because Presbyterian Healthcare's claims all arise out of the Broker-Dealer Agreement, in which the parties agreed that all actions and proceedings must be brought in the United States District Court in the County of New York. The Broker-Dealer Agreement's forum-selection clause is mandatory. Furthermore, the Court concludes that there is no reason that it should not be enforced.
The Court concludes that all of Presbyterian Healthcare's claims, including those relating to the 2006 interest rate swaps, arise out of the Broker-Dealer Agreement — and not an advisory relationship — because they all concern the issuing of the ARS Bonds.
The Court interprets "arising out of" a contract to mean originating from, and bearing causal connection with, the contract. The Court, the Tenth Circuit, nor the Federal Circuit has offered a precise definition of the phrase "arising out of." Many courts have noted that "arising out of" is more narrow than other terms, like "relating to" or "connected to," etc. See, e.g., Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 644, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985); Phillips v. Audio Active Ltd., 494 F.3d 378, 389 (2d Cir.2007) ("Phillips"); John Wyeth & Bro. Ltd. v. CIGNA Int'l Corp., 119 F.3d 1070, 1074 (3d Cir.1997). The most thorough consideration of the matter comes from the Second Circuit, with which the Court agrees. In Phillips, the Second
Coregis Ins. Co. v. Am. Health Found., Inc., 241 F.3d at 128.
Several courts facing an identical forum-selection clause and almost identical claims, as in this case, have found that the claims "arise out of" the broker-dealer contract. Presbyterian Healthcare is not the first ARS bond issuer to sue Goldman Sachs over its alleged manipulation of the ARS Bond market. In Goldman, Sachs and Co. v. Golden Empire Schools Financing Authority, a "public financing authority" in California retained Goldman Sachs to issue ninety-five million dollars of ARS bonds. 922 F.Supp.2d at 437. The parties signed multiple underwriter agreements and broker-dealer agreements. See 922 F.Supp.2d at 437. As in this case, the broker-dealer agreement contained a forum-selection clause stipulating that "all actions and proceedings arising out of this Broker-Dealer Agreement or any of the transactions contemplated hereby shall be brought in the United States District Court in the County of New York." 922 F.Supp.2d at 438. After the ARS auctions failed in 2008, Golden Empire sought FINRA arbitration, arguing that, by not telling it about Goldman Sachs' "cover bids," Goldman Sachs had fraudulently induced Golden Empire into issuing ARS bonds. 922 F.Supp.2d at 438. Goldman Sachs responded by filing a complaint in Southern District of New York, seeking an injunction against the FINRA arbitration on the grounds that the broker-dealer agreement's forum-selection clause precluded it. See 922 F.Supp.2d at 437. Golden Empire argued that its claims arose out of the underwriter agreements and not the broker-dealer agreements, and thus the broker-dealer agreement's forum-selection clause did not apply. See 922 F.Supp.2d at 443. The Honorable Richard J. Sullivan, United States District Judge for the Southern District of New York ruled:
922 F.Supp.2d at 443-44 (emphases added) (citations omitted). On appeal, the Second Circuit upheld the district court's ruling, finding that "the broadly worded forum selection clause encompasses `all actions and proceedings arising out of ... any of the transactions contemplated' by the broker-dealer agreements, which plainly include Golden Empire's ... ARS issuances." Goldman, Sachs & Co. v. Golden Empire Sch. Fin. Auth., 764 F.3d 210, 216 (2d Cir.2014) (first alteration in original).
Reno tells a similar story. The City of Reno hired Goldman Sachs to issue $211 million in ARS bonds, signing multiple underwriter and broker-dealer agreements. See 747 F.3d at 735-37. The broker-dealer agreements contained an identical forum-selection clause as in Golden Empire and in this case. See 747 F.3d at 736-737. After the ARS market collapsed in 2008, the City of Reno attempted to arbitrate with Goldman Sachs under FINRA, but Goldman Sachs filed a claim in the United States District Court for the District of Nevada to enjoin the arbitration on the grounds that the broker-dealer agreements' forum-selection clause precluded arbitration. See 747 F.3d at 737. The district court denied Goldman Sachs' motion, and Goldman Sachs appealed to the Ninth Circuit. See 747 F.3d at 738. The Ninth Circuit found that the forum-selection applied:
Goldman, Sachs & Co. v. City of Reno, 747 F.3d at 747 (emphasis added).
In North Carolina Municipal Power Agency, the defendant worked with Goldman Sachs to issue $149.7 million in ARS bonds. 2013 WL 6409348, at *1. The parties signed underwriter and broker-dealer agreements, and the broker-dealer agreement contained a forum-selection clause identical to the one in this case. See 2013
Goldman, Sachs & Co. v. N. Carolina Mun. Power Agency No. One, 2013 WL 6409348, at *7 (emphasis added)(alterations in original)(internal citations omitted).
Similar as they are, there are a few differences between the case before the Court and the cases in the Second and Ninth Circuits. Here, Presbyterian Healthcare argues that its claims arise from a broader advisory relationship, while the defendants in the above cases argued that their claims arose from the underwriter agreement, which lacked a forum-selection clause. See North Carolina Municipal Power Agency, 2013 WL 6409348, at *7; Reno, 747 F.3d at 747; Golden Empire, 922 F.Supp.2d at 443. Presbyterian Healthcare's business dealings with Goldman Sachs involved interest rate swaps, which, of the above cases, only Reno has in common. See Reno, 747 F.3d at 741. The above rulings, hailing from courts within the Second and Ninth Circuits, do not, of course, bind the court. Yet, when a party presents new arguments for a fact pattern virtually identical to those in several other cases yielding, from that party's perspective, discouraging results, the Court must be wary that these pleadings are not merely artful.
Presbyterian Healthcare's claims are inextricably linked to, and originate from, the ARS bonds. In their FINRA Claim and briefings to the Court, Presbyterian Healthcare asserts that Goldman Sachs misrepresented the ARS market's stability from the moment of the ARS Bond creation in 2004, see Complaint ¶¶ 15-16, at 5-6, to the ARS bond market crash in 2008. In its FINRA Claim, Presbyterian Healthcare requests awards that include refinancing the ARS bonds, fees incurred by the ARS Bonds' issuance, and costs of the bonds over the synthetic rate they expected from the 2006 interest rate swaps. See FINRA Claim at 29.
Even the 2006 interest rate swaps are inextricably linked to, and originate from, the ARS Bonds. The swaps were designed to complement the ARS Bonds and
FINRA Claim ¶ 27, at 11 (emphases added). Presbyterian Healthcare also explains that "the effectiveness of the 2006 Swaps was heavily reliant on the willingness of Goldman to continue buying the ARS Bonds and/or ensure that rates set in the auctions were in line with rates payable under the 2006 Swaps." FINRA Claim ¶ 30, at 12. In other words, to whatever extent the 2006 Swaps cost Presbyterian Healthcare money in the end — either for failing to provide Presbyterian Healthcare the income needed to pay the ARS bond interest or the cost of terminating the Swaps — the damages resulted from one specific origin: Goldman Sachs' alleged misrepresentations about the ARS Bond market. The Court is comfortable finding that any interest rate swap claims originate from, and bear a causal connection with, the issuing of the ARS Bonds. When Goldman Sachs enticed Presbyterian Healthcare to enter interest-rate swaps rather than leave the ARS bond market, this action was not a new and distinct tort; it was simply another moment at which Goldman Sachs asserted that the ARS bond market was a safe bet.
Presbyterian Healthcare alleges that its claims do not arise out of the Broker-Dealer Agreement, and, instead, arise out of a broader advisory relationship between Presbyterian Healthcare and Goldman Sachs. See Response at 15-16. Presbyterian Healthcare argues that the claims arise from a "complex advisory relationship that has spanned many years and multiple transactions." Response at 15. Presbyterian Healthcare describes this relationship as beginning in 2004, when Goldman Sachs "advised PHS on its capital formation strategy ... [which] culminated in the issuance of the 2004 ARS Bonds[,] included the structuring and issuance of the debt, and included advisory services and recommendations regarding how much debt to issue." Response at 15-16.
Presbyterian Healthcare argues that, "[i]n seeking to enjoin the FINRA Arbitration, Goldman attempts to envelope a complex advisory relationship that has spanned many years and multiple transactions under a single agreement that governs what is essentially one administrative task." Response at 15. Presbyterian Healthcare contends that its dispute relates to Goldman Sachs' broader role as Presbyterian Healthcare's investment advisor, and is not limited to Goldman Sachs' issuing of the ARS bonds and facilitating
To the extent that Presbyterian Healthcare asserts, in its arbitration action, non-contract claims like breach of fiduciary duty, see FINRA Claim at 25, these claims fall within the forum-selection clause's reach, because courts have interpreted forum-selection clauses broadly to govern freestanding, non-contract claims. See, e.g., Abbott Labs. v. Takeda Pharm. Co., 476 F.3d 421, 424 (7th Cir.2007) (finding that a tort action for breach of fiduciary duty falls within a forum-selection clause, because the "dispute is the parties' disagreement over the validity and interpretation of the clause"); Absolute Activist Master Value Fund, Ltd. v. Ficeto, No. CIV 09-8862 GBD, 2013 WL 1286170, at *18 (S.D.N.Y. Mar. 28, 2013) ("When forum selection clauses contain `relating to' or `arising under' language, courts are inclined to interpret those clauses broadly to cover disputes beyond those for breach of contract," including claims for breach of fiduciary duty (citing Coregis Ins. Co. v. Am. Health Found., 241 F.3d at 128)). Presbyterian Healthcare alleges that Goldman Sachs breached its fiduciary duty when it "advis[ed] that [Presbyterian Healthcare] enter into and maintain ... complex, volatile and risky financing structures [and] artificially supported the ARS market and then withdrawing from that market for its own profit." FINRA Claim at 25. While breach of fiduciary duty is not a contract claim, its subject concerns the Broker-Dealer Agreement and the issuing of the ARS bonds, and, therefore, falls within the Broker-Dealer Agreement's forum-selection clause's purview.
Moreover, as a general matter, the Court is wary of allowing a party seeking to avoid a forum-selection clause to simply assert that its claims in fact arise out of a greater implied advisory relationship, particularly where Presbyterian Healthcare can offer little more than Goldman Sachs' proposals and presentations featuring language that could be construed as offering advice. While Presbyterian Healthcare cannot point to a written agreement that clearly establishes Goldman Sachs' investment adviser role, Presbyterian Healthcare may still plausibly argue that its claims arise out of an advisory relationship if it can demonstrate that Goldman Sachs breached a fiduciary duty. As Presbyterian Healthcare cites no controlling authority nor presented any legal theories why Goldman Sachs owed Presbyterian Healthcare a fiduciary duty, the Court must do some legwork of its own.
In diversity jurisdiction cases such as this one, the Court employs New Mexico's choice-of-law rules to determine which state's substantive law to apply. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. at 496-97, 61 S.Ct. 1020; Pepsi-Cola Bottling Co. v. PepsiCo, Inc., 431 F.3d at 1255. The first step in this analysis is to determine whether the dispute is one
New Mexico recognizes that "[i]nvestment advisers enter into relationships of `trust and confidence' with their clients," State ex rel. Udall v. Colonial Penn Ins. Co., 1991-NMSC-048, ¶ 33, 112 N.M. 123, 812 P.2d 777, 785 (internal quotation marks omitted)(quoting SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180, 190, 84 S.Ct. 275, 11 L.Ed.2d 237 (1963)), and that "the investment adviser is a fiduciary," State ex rel. Udall v. Colonial Penn Ins. Co., 1991-NMSC-048, ¶ 33, 112 N.M. 123, 812 P.2d at 785 (internal quotation marks omitted)(quoting SEC v. Capital Gains Research Bureau, Inc., 375 U.S. at 194, 84 S.Ct. 275). Yet, without a contract reflecting an advisory relationship, or any specific evidence besides Presbyterian Healthcare's conclusory assertions indicating such a relationship existed, the Court can only proceed by considering, more generally, whether Goldman Sachs' conduct created a fiduciary relationship.
In New Mexico, a fiduciary relationship "exists in all cases where there has been a special confidence reposed in one who in equity and good conscience is bound to act in good faith and with due regard to the interests of one reposing the confidence." Alcantar v. Sanchez, 2011-NMCA-073, 150 N.M. 146, 257 P.3d 966, 975-76 (internal quotation marks omitted)(quoting Moody v. Stribling, 1999-NMCA-094, ¶ 18, 127 N.M. 630, 985 P.2d 1210). Presbyterian Healthcare fails to provide sufficient evidence that it held a "special confidence" in Goldman Sachs. Rather, the evidence before the Court suggests otherwise. For one, the parties negotiated their only written agreements at arms length, with experienced counsel representing each party. See Guidance Endodontics, LLC v. Dentsply Int'l, Inc., 2009 WL 3672505, at *10 ("Without being shown any authority for the existence of a fiduciary duty between two commercial entities, represented by counsel, and negotiating at arms length, the Court is unwilling to conclude that, under New Mexico law, a fiduciary duty would exist."). For another, the materials Presbyterian Healthcare submits as proof of an advisory relationship, see, e.g., Proposal, are entirely consistent with a seller promoting its goods. What is more, one of the materials that Presbyterian Healthcare submits as proof of an advisory relationship features a "Disclaimer" page which concludes with a seemingly express — although perhaps not conspicuous — indication that Goldman
January 2006 Discussion Materials Disclaimer at 3. See May 2005 Discussion Materials Disclaimer at 3, dated May 12, 2015, filed December 22, 2015 (Doc. 36-3)(featuring an identical paragraph as part of a similar presentation).
Even if the Court determined that New York law should apply, the outcome is the same. In New York, a fiduciary relationship "exists between two persons when one of them is under a duty to act or to give advice for the benefit of another upon matters within the scope of the relation." EBC I Inc. v. Goldman, Sachs & Co., 5 N.Y.3d 11, 799 N.Y.S.2d 170, 832 N.E.2d 26, 31 (2005). The "determination of a fiduciary relationship is fact-specific, [but] no such relationship exists between those involved in arm's length business transactions." HF Mgmt. Servs. LLC v. Pistone, 34 A.D.3d 82, 818 N.Y.S.2d 40, 42 (2006) (citing Ne. Gen. Corp. v. Wellington Adv. Inc., 82 N.Y.2d 158, 604 N.Y.S.2d 1, 624 N.E.2d 129, 131 (1993)). New York courts do not find that an underwriter-issuer relationship creates a fiduciary obligation absent additional factors. See HF Mgmt. Servs. LLC v. Pistone, 818 N.Y.S.2d at 42 (2006). Likewise, "[t]here is no general fiduciary duty inherent in an ordinary broker/customer relationship." BNP Paribas Mortgage Corp. v. Bank of Am., N.A., 866 F.Supp.2d 257, 269-71 (S.D.N.Y.2012) (citing Indep. Order of Foresters v. Donald, Lufkin & Jenrette, Inc., 157 F.3d 933, 940 (2d Cir.1998)).
Generally speaking, a fiduciary duty exists when "one party reposes confidence in another and reasonably relies on the other's superior expertise or knowledge." WIT Holding Corp. v. Klein, 282 A.D.2d 527, 529, 724 N.Y.S.2d 66 (N.Y. 2001). A party seeking to establish a fiduciary duty must show that "the relationship was `unique or distinct' from the relationship the institution typically enjoyed with individuals." Sears v. First Pioneer Farm Credit, ACA, 46 A.D.3d 1282, 1286, 850 N.Y.S.2d 219 (N.Y.2007).
Presbyterian Healthcare fails to provide sufficient evidence that its relationship with Goldman Sachs was "unique or distinct" for the same reasons that Presbyterian Healthcare failed to demonstrate that it held a "special confidence" in Goldman Sachs under New Mexico law: the evidence suggests that the parties were acting in their traditional roles as broker-dealer and as issuer. Moreover, Presbyterian Healthcare puts forth no evidence that Goldman Sachs received the underwriting contract in exchange for its advisory services — i.e., there is nothing indicating that the Underwriting contract's terms were inconsistent with a normal underwriting transaction.
Presbyterian Healthcare also fails to demonstrate that it "repose[d] confidence" in Goldman Sachs or that it "reasonably
Moreover, even assuming that Presbyterian Healthcare relied on Goldman Sachs, there is little indicating to the Court that such reliance would have been reasonable. While some documents could, arguably, flirt with a representation of itself as an advisor, these representations are entirely consistent with what they in fact turned out to be: not promises of good advice, but fancy words amounting to little more than a sales pitch. If a client expected unbiased financial advice, it would be reasonable to question the seemingly odd coincidence that each financial instrument which Goldman Sachs recommended happened to be designed and sold by Goldman Sachs.
Presbyterian Healthcare asserts that "regardless of the applicability of the forum selection clause, a forum selection clause in a separate, a narrow agreement does not supplant a broad, preexisting obligation among the parties to arbitrate." Response at 22. Presbyterian Healthcare provides two cases to support this proposition. First, Presbyterian Healthcare contends that Personal Security and Safety Systems Inc. v. Motorola Inc., 297 F.3d at 394-95, holds that, "`in the absence of a contrary expression of intent,' the stock purchase agreement was at least `susceptible to an interpretation' favoring arbitration" and that "given federal policy favoring arbitration, even aspects of a dispute that may otherwise be governed by a narrow agreement will be subject to arbitration." Response at 22 (quoting Pers. Sec. & Safety Sys. Inc. v. Motorola Inc., 297 F.3d at 394-95).
No presumption towards arbitration exists here, however. The presumption applies only when the parties dispute only the scope of an arbitration clause, but "disappears when the parties dispute the existence of a valid arbitration agreement." Dumais v. Am. Golf Corp., 299 F.3d 1216, 1220 (10th Cir.2002) (emphasis added). See also Granite Rock Co. v. Int'l Bhd. of Teamsters, 561 U.S. 287, 301, 130 S.Ct. 2847, 177 L.Ed.2d 567 (2011) (stating that "the presumption of arbitrability only [applies] where a validly formed and enforceable arbitration agreement is ambiguous about whether it covers the dispute at hand"); Applied Energetics, Inc. v. NewOak Capital Markets, LLC, 645 F.3d 522, 526 (2d Cir.2011) (holding that "while doubts concerning the scope of an arbitration clause should be resolved in favor of arbitration, the presumption does not apply to disputes concerning whether an agreement to arbitrate has been made").
In Personal Security and Safety Systems, Inc. v. Motorola, Inc., the arbitration question was not whether the arbitration agreement existed or was valid, but rather what is the extent of its scope:
297 F.3d at 392 (emphasis added).
By contrast, here Goldman Sachs questions the existence of the FINRA Arbitration clause in light of the Broker-Dealer Agreement. Goldman Sachs asserts that its "valid and binding agreement with PHS supersedes any right that PHS may have had to arbitrate under the FINRA Code of Arbitration Procedure." Answer ¶ 33, at 20 (emphasis added).
Next, Presbyterian Healthcare argues that the Court should follow the Fourth Circuit's ruling in Carilion, which, Presbyterian Healthcare contends, found that "identical language in a broker-dealer agreement does not supersede an existing obligation to arbitrate," Response at 23 (citing Carilion, 706 F.3d at 330), as well as the United States District Court for the District of Minnesota, which agreed with Carilion's reasoning in UBS Securities LLC v. Allina Health System, rather than follow the cases in the Second and Ninth Circuits, which found otherwise. A closer reading of Carilion, however, reveals that the Court need not make that choice here, because Carilion supports transferring this case.
The plaintiffs in Carilion — UBS Financial Services, Inc. and Citigroup Global Markets, Inc. — helped the defendant — Carilion Clinic — issue over $2 million in ARS Bonds. Carilion, 706 F.3d at 322. Carilion Clinic entered into broker-dealer agreements with both plaintiffs, and these agreements contained the following forum-selection clause:
Carilion, 706 F.3d at 329. After the ARS Bond market collapsed in 2008, Carilion Clinic filed a FINRA arbitration claim alleging that the plaintiffs misled Carilion Clinic regarding the reliability of the ARS Bond market, and failed to disclose that they routinely placed support bids to prevent auction failures. See Carilion, 706 F.3d at 322. UBS Financial and Citigroup Global filed a complaint in the United States District Court for the Eastern District of Virginia seeking an injunction on the arbitration proceedings and a declaratory judgment of FINRA's lack of jurisdiction over the arbitration. See 706 F.3d at 323. UBS Financial and Citigroup Global argued that the broker-dealer agreements' forum-selection clauses precluded FINRA arbitration because the phrase "all actions and proceedings" includes arbitration; and because FINRA arbitration cannot be brought in a district court, the forum-selection clause must supersede the FINRA arbitration provision. See 706 F.3d at 329. The court rejected this argument for three reasons. First, the court found that assuming "actions and proceedings" includes arbitration, the forum-selection clause "could not be read to preclude arbitration; to the contrary, it presumes its availability but localizes it, albeit to a forum where it could not be pursued." 706 F.3d at 329 (emphasis in original). Second, the court asserts that "one would reasonably expect that a clause designed
Carilion, 706 F.3d at 329-30 (emphases added).
While Carilion certainly held that the forum-selection clause did not supersede the FINRA arbitration provision, it did not find that the entire forum-selection clause was invalid in light of it. This distinction makes considerable difference in this case, because, under Carilion, the forum-selection clause's power to compel litigation to be brought in a certain forum survives its finding that the clause does not supersede arbitration actions. Thus, applying Carilion to this case is a straightforward exercise, and achieves a result contrary to Presbyterian Healthcare's assertions: Presbyterian Healthcare has brought before the Court an "action or proceeding" and, pursuant to the forum-selection clause in the Broker-Dealer Agreement, Presbyterian Healthcare must bring such action or proceeding in the United States District Court in the County of New York.
There is nothing "exceptional" about this case to rebut the presumption that a forum-selection clause is valid. The Tenth
Public interest factors favor honoring the forum-selection clause. Goldman Sachs argues that: (i) these cases do not overburden the Southern District of New York — asserting that "in the past two years alone the SDNY heard and decided the issue posed by Presbyterian Healthcare's Complaint in four nearly identical cases, and each of them was decided within ten months or less from the date of filing"; (ii) there is no local interest in keeping the dispute in New Mexico, given that Presbyterian Healthcare's claims primarily concern financial transactions in New York; and (iii) both the Court and the Southern District of New York "are equally `at home with the law' governing this action [as] PHS's [c]omplaint ... is brought pursuant to federal statute (28 U.S.C. §§ 2201 and 2202) and A Federal Rule of Civil Procedure (Rule 57)." Motion at 13. Again, Presbyterian Healthcare declines to rebut Goldman Sachs' claims. The Court sees no reason to disagree with Goldman Sachs on these contentions, other than to note that the Court certainly has an interest in ensuring a company within its district is afforded all due justice — though the Court sees no compelling reason why SDNY could not provide that opportunity, even if Presbyterian Healthcare appears to face long odds there.
Goldman Sachs argues that public interest factors favor honoring the forum-selection clause, because doing so protects the parties' bargained-for expectations and dissuades "gamesmanship and forum shopping." Motion at 13-14. Presbyterian Healthcare denies that it chose the District of New Mexico for cynical reasons, arguing that it was "entitled, and in fact required, to bring action in this venue to enforce their arbitration rights," because the FINRA action was in New Mexico, and federal courts "have consistently held that only the district court in the location of the arbitration can compel arbitration." Response at 14 (citing Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Lauer, 49 F.3d 323, 327 (7th Cir.1995), Mgmt. Recruiters Int'l, Inc. v. Bloor, 129 F.3d 851, 853 (6th Cir.1997), Inland Bulk Transfer Co. v. Cummins Engine Co., 332 F.3d 1007, 1018 (6th Cir.2003)). It does not follow, however, that this district would be the only court capable of hearing the question of whether a party must arbitrate. Section 3 of Title 9 of the United States Code provides:
9 U.S.C. § 3. A Southern District of New York court summarized the statute:
DaPuzzo v. Globalvest Mgmt. Co., L.P., 263 F.Supp.2d 714, 739 (S.D.N.Y.2003) (Marrero, J.). While the Court declines to ponder whether Presbyterian Healthcare' choice of venue reflects "gamesmanship and forum shopping," Motion at 14, it concludes that when, as in this case, a forum-selection clause designates a forum other than the one that can lawfully compel arbitration, that bargained-for forum remains the appropriate venue for a party seeking to compel arbitration, if only to earn the right to bring the suit elsewhere.
The forum-selection clause is mandatory, because its language cannot be reasonably construed as being permissive. Goldman Sachs argues that the exclusive forum-selection clause is mandatory by its use of the word "shall." Motion at 10 (citing Goldman, Sachs & Co. v. Golden Empire Sch. Fin. Auth., 922 F.Supp.2d at 443). "The difference between a mandatory and permissive forum selection clause is that `[m]andatory forum selection clauses contain clear language showing that jurisdiction is appropriate only in the designated forum.'" Am. Soda, LLP v. U.S. Filter Wastewater Grp., Inc., 428 F.3d 921, 926 (10th Cir.2005). "In contrast, permissive forum selection clauses authorize jurisdiction in a designated forum, but do not prohibit litigation elsewhere." Am. Soda, LLP v. U.S. Filter Wastewater Grp., Inc., 428 F.3d at 926-27 (citation omitted). In K & V Scientific Co. v. BMW, the Tenth Circuit adopted the majority rule for enforcing forum-selection clauses. See 314 F.3d at 500. Specifically, it concluded that, when venue is specified, such as when the parties designate a particular county or tribunal, and the mandatory or obligatory language accompanies the designation, a forum-selection clause will be enforced as mandatory. See K & V Sci. Co. v. BMW, 314 F.3d at 499.
Although the Tenth Circuit has said the use of the word "shall" generally indicates a mandatory intent, unless a convincing argument to the contrary is made, Milk `N' More, Inc. v. Beavert, 963 F.2d at 1346, "shall" does not automatically render a forum-selection clause mandatory. Courts should resolve any ambiguity whether a forum-selection clause is mandatory or permissive by construing the language against the drafter. See K & V Sci. Co. v. BMW (citing Milk `N' More, Inc. v. Beavert, 963 F.2d at 1346). The K & V Scientific Co. v. BMW court offered examples of permissive forum-selection clauses that use "shall":
K & V Scientific Co. v. BMW, 314 F.3d at 499. In the first example, "shall" refers to the "courts of California, County of Orange" as having jurisdiction over related litigation and not that related litigation "shall" be brought in those courts. In Keaty v. Freeport Indon., Inc., "shall" refers
K & V Scientific Co., Inc. v. BMW, 314 F.3d at 499-500 (footnote omitted). In that example, the word "shall" is used in reference to "action[s] brought hereunder" as needing to be brought in Gloucester County.
Here, the forum-selection clause is mandatory:
Broker-Dealer Agreement at 14 (emphasis added). This language parallels structure of the clause in Docksider, Ltd. v. Sea Technology, Ltd. in that "shall" refers to the "actions and proceeding" having to be brought in a certain forum, and not that a certain forum "shall" have jurisdiction.
Presbyterian Healthcare argues that the Court cannot compel the NMHELC to litigate in the Southern District of New York, because NMHELC is not a signatory to the Broker-Dealer Agreement. See Response at 21-22. While the Court can find no cases in its own history or in the Tenth Circuit considering this issue, district courts elsewhere in the Tenth Circuit and in other Circuits have found that a non-signatory can be subject to a forum-selection clause if the connection between the agreement and the non-signatory is sufficiently strong — i.e., if the party is "`closely related' to the dispute such that it becomes `foreseeable' that it will be bound." Hugel v. Corp. of Lloyd's, 999 F.2d 206, 209 (7th Cir.1993). See, e.g., Manetti-Farrow, Inc. v. Gucci Am., Inc., 858 F.2d 509, 514 n. 5 (9th Cir.1988) ("[T]he alleged conduct of the non-parties is so closely related to the contractual relationship that the forum selection clause applies to all defendants."); Mozingo v. Trend Pers. Servs., No. CIV 10-4149 JTM, 2011 WL 3794263, at *6 (D.Kan. Aug. 25, 2011) (applying the closeness standard while noting that "[t]he Tenth Circuit has not explicitly held that non-signatories may be bound by a forum selection clause"), aff'd, 504 Fed.Appx. 753 (10th Cir.2012). Under this standard, courts have, for example, applied forum-selection clauses to "corporations owned and controlled" by the signatory, Hugel v. Corp. of Lloyd's, 999 F.2d at 210, the
Regions Bank v. Wyndham Hotel Mgmt., Inc., No. CIV 3:09-1054, 2010 WL 908753, at *6 (M.D.Tenn. Mar. 12, 2010).
While NMHELC is undoubtedly close to Presbyterian Healthcare, pursuant to NMHELC's role as "a political body ... set up to help the various hospitals in New Mexico issue bonds," Tr. at 38:17-19 (Edwards), the Court will not apply the Broker-Dealer Agreement's forum-selection clause to NMHELC. The Court is concerned about applying contracts and forum selection clauses to people who did not sign the contract. See Smith/Enron Cogeneration Ltd. P'ship, Inc. v. Smith Cogeneration Int'l, Inc., 198 F.3d 88, 97 (2d Cir.1999) ("[A] court should be wary of imposing a contractual obligation to arbitrate on a non-contracting party."); Am. Bell Inc. v. Fed'n of Tel. Workers of Penn., 736 F.2d 879, 888 (3d Cir.1984) ("Because the courts are reluctant to impose contractual obligations on non-signatory parties, they generally do so only where the obligations are justified by legitimate concerns for employee welfare."). This concern seems particularly poignant when the non-signatory is a public agency who issues bonds, but is not ultimately liable for the bonds; if a state agency cannot bring a case in its own state, it needs to give up that right itself — not have someone else give up that right on the agency's behalf. In any case, it is not quite true, as Presbyterian Healthcare asserts, that there is "not one shred of evidence in front of the Court that suggests that the [NMHELC] even knew this [Broker-Dealer Agreement] existed," Tr. at 56:8-14 (Edwards), but what evidence exists is not overwhelming. Five days before Presbyterian Healthcare and Goldman Sachs signed the Broker-Dealer Agreement,
Chrysler Credit Corp. v. Country Chrysler, Inc., 928 F.2d at 1516 (internal quotation marks omitted). See Silver v. Brown, 678 F.Supp.2d at 1204 (stating the factors that the courts consider in making a venue determination under § 1404(a)), aff'd in part, rev'd in part and remanded, 382 Fed.Appx. 723 (10th Cir.2010).
The "interest of justice" is a separate element of the transfer analysis that relates to the court system's efficient administration. Van Dusen v. Barrack, 376 U.S. at 626-27, 84 S.Ct. 805. "For this element, courts look to factors including docket congestion and likely speed to trial in the transferor and potential transferee forums; each court's relative familiarity with the relevant law; the respective desirability of resolving controversies in each locale; and the relationship of each community to the controversy." Research Automation, Inc. v. Schrader-Bridgeport Int'l, Inc., 626 F.3d at 977 (citations omitted). The Tenth Circuit has interpreted the phrase — "if it is in the interest of justice" — to grant a district court discretion in making the decision to transfer the action. Driggers v.
Although no party has requested that the Court sever and transfer parts of this case, a district court may sever a case under Rule 21 to "transfer one action while retaining jurisdiction over the other." Chrysler Credit Corp. v. Country Chrysler, Inc., 928 F.2d at 1519 (citing Wyndham Assoc. v. Bintliff, 398 F.2d 614, 618 (2d Cir.1968)). Courts are mindful of judicial efficiency concerns, however, and might not sever and transfer a case when doing so results in two venues hearing virtually the same case based on the same set of facts. See, e.g., Gallery House, Inc. v. Yi, 587 F.Supp. 1036, 1039-40 (N.D.Ill.1984) ("When the most efficient administration of justice in a copyright infringement action compelled the continuation of the action against both defendants in a single forum, severance of the claim against one defendant as to whom transfer would have been permissible was inappropriate.").
Liaw Su Teng v. Skaarup Shipping Corp., 743 F.2d 1140, 1148 (5th Cir.1984), overruled on other grounds by In re Air Crash Disaster Near New Orleans, La. on July 9, 1982, 821 F.2d 1147 (5th Cir.1987).
Sec. & Exchange Comm'n v. Nat'l Student Mktg. Corp., 360 F.Supp. 284, 296 (D.D.C. 1973) (Parker, J.).
The Court agrees with the principle that it should not sever and transfer cases when the cost to judicial efficiency outweighs the benefit to the parties, particularly in light of § 1404(a)'s purpose to minimize inefficiency. See Cont'l Grain Co. v. The FBL-585, 364 U.S. 19, 26, 80 S.Ct. 1470, 4 L.Ed.2d 1540 (1960) ("To permit a situation in which two cases involving precisely the same issues are simultaneously pending in different District Courts leads to the wastefulness of time, energy and money that § 1404(a) was designed to prevent."). If the Court were to send Presbyterian Healthcare to the Southern District of New York, but keep NMHELC here in the District of New Mexico, it would be asking Goldman Sachs to defend two separate actions in two different courts based on the same set of facts. The Court concludes that obviating whatever inconvenience NMHELC would suffer joining Presbyterian Healthcare in the Southern District of New York cannot justify the judicial inefficiency inherent in trying essentially the same case in two different forums, particularly when, in this action, both Presbyterian Healthcare and NMHELC are represented by the same counsel. See Tr. at 58:21-24 (Edwards).
Motion at 6 (internal citations omitted).
